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There are many individuals in the United States who are struggling with significant amounts of debt. They may not be able to make their monthly payments no matter how hard they try. Individuals in this situation may attempt to find a debt relief program to help them. Some of these organizations will simply provide advice on how to deal with increasing debt. Others will provide a program designed to help a person to repay their creditors.


According to the Federal Trade Commission (FTC), a person considering a debt relief program should research the organization. This can begin with the Attorney General in the state where a person resides. It’s important to know if an organization has all of the necessary licenses to conduct business in the state. The next step is to check and see what complaints, if any, have been made about the organization to the Better Business Bureau. Individuals who are considering using a debt relief program should never rely on a verbal promise from them. It’s important to see what services are offered in writing. The length of time for the program, as well as its costs and details, should be made clear in any contract offered.

Debt Settlement

It is possible for debt relief companies to try and settle one or more of an individual’s debts. It is also possible for them to make a person’s debt situation worse. Many of these programs will require a person to deposit money into a special savings account for three years or longer during the time their debt being settled. People often struggle to make the required payments long enough for the program to work. Many individuals become frustrated and end up leaving the debt settlement programs. Their credit score may be lower than when they started.

Direct Payments

Many debt settlement programs request those participating in their program to stop sending payments directly to creditors. This has caused many people to experience a negative effect on their credit report. It has also caused other serious consequences. If a creditor is not paid on time, the client will accumulate late fees and penalties that could significantly increase their debt. In some cases, people are sued by their creditors for repayment. Should a creditor win a lawsuit, they will have the right to put a lien on a person’s property as well as garnish their wages and more.


There have been lawsuits against debt relief agencies. According to Consumer Reports, a lawsuit was brought in San Mateo, California. It charged that after depositing 15 percent of their debt into a bank account and giving the agency legal authority use the money to handle their debt, the company did not follow through with its promises. The company failed to contact all of the client’s creditors and negotiate a settlement. People who believed their debts were being paid discovered many of their creditors had sent their accounts to collection agencies or started legal action against them. Many of the clients were not able to complete the debt relief program even after being on it for months or years. The agency kept charging these clients administrative fees. Many were denied the money-back guarantee they were promised.

Check Credit Report

When a person is in the process of debt settlement, it is important it shows on their credit report. When a person uses a debt relief program, and their credit report shows their credit rating is only getting worse, they know something is wrong. It is also possible for creditors to be paid but fail to report it to the credit bureaus. These are corrections that can be made but will require a person to provide necessary documentation. A person also needs to then follow up and make certain their credit report reflects the necessary changes.


According to Bankrate, when a person has debt, the best approach is to be proactive. A person should never wait until they are months behind in their payments to do something about the situation. It’s important they contact their creditors immediately when having financial problems or when such problems are anticipated. Most creditors are willing to work with their clients. Many have repayment programs available that are designed to work with a person’s financial situation. This could help keep a person current until their situation changes, and they can once again begin making regular payments.